We recently wrote about the Biden Administration’s $2.3 Trillion Green New Deal. Government spending programs like these will disproportionately increase U.S. imports from China given that the U.S. manufactures little in the way of finished goods while China has solidified its position as the “world’s manufacturer”. We depict the U.S. trade deficit with China below. Our view is that the U.S. trade deficit with China could reach $1 Trillion per year within the next four years. It is only a matter of time before the RMB becomes the world’s reserve currency. A.) Mature markets are dependent on China’s low-cost manufacturing capability and do not have the political will to change this reality. B.) Mainland China now controls Hong Kong (one nation, one currency). C.) A + B = Game Over. RMB will be the world’s reserve currency within the next 20-25 years.

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